Challenges of calculating cost-effectiveness thresholds – Authors' reply
Authors: Andres Pichon-Riviere, Michael Drummond, Alfredo Palacios, Sebastián Garcia-Marti, Federico Augustovski
Journal: The Lancet Global Health (2023)

We welcome the interest of Laura Vallejo-Torres and colleagues and Angel Paternina-Caicedo and colleagues in our recent study.1Pichon-Riviere A Drummond M Palacios A Garcia-Marti S Augustovski F Determining the efficiency path to universal health coverage: cost-effectiveness thresholds for 174 countries based on growth in life expectancy and health expenditures.Lancet Glob Health. 2023; 11: e833-e842Summary Full Text Full Text PDF PubMed Scopus (3) Google Scholar We agree with the two main concepts presented by Vallejo-Torres and colleagues: cost-effectiveness thresholds (CETs) should ideally reflect the health opportunity costs of funding decisions, and CET values should be used cautiously. Caution is required in using any CET estimation as today no single method can be considered the gold standard. The seminal work by Claxton and colleagues,2Claxton K Martin S Soares M et al.Methods for the estimation of the National Institute for Health and Care Excellence cost-effectiveness threshold.Health Technol Assess. 2015; 19: 1-503Crossref PubMed Google Scholar which estimated a CET for the UK's National Health Service of £12 936, relied on very detailed programme budgeting data, unlikely to be available in many countries. However, there are aspects of the methodology that are still being debated, and the resulting CET continues to receive cautionary advice (eg, it has not changed the threshold that the UK National Institute for Health and Care Excellence uses in making recommendations to the UK's National Health Service). The biggest criticism in the UK is that none of the approaches, even the more complicated econometric analyses, can provide an undisputed estimate of what is being displaced at the margin. In other countries willing to pursue the quest for health opportunity cost CETs, there are no optimal solutions. One alternative is to use CETs that are based on the extrapolation of UK data (adding the uncertainty regarding the transferability of these estimates),3Woods B Revill P Sculpher M Claxton K Country-level cost-effectiveness thresholds: initial estimates and the need for further research.Value Health. 2016; 19: 929-935Summary Full Text Full Text PDF PubMed Scopus (467) Google Scholar or to attempt to estimate their own health opportunity cost CET using within-country data. As Vallejo-Torres and colleagues correctly point out, this approach requires estimating the health outcomes-health expenditures elasticities, ideally controlling for potential confounders and accounting for unobserved heterogeneity and reverse causality. On top of the method-related uncertainty, the shortage of country-level health and cost data further escalates the uncertainty of these CET estimates.4Chi YL Blecher M Chalkidou K et al.What next after GDP-based cost-effectiveness thresholds?.Gates Open Res. 2020; 4: 176Crossref PubMed Scopus (26) Google Scholar This implies that many of the limitations and concerns raised by Vallejo-Torres and colleagues regarding our study are shared by virtually all other CET estimates. We would like to clarify some of the observations made by Vallejo-Torres and colleagues. First, the appreciation that our study “derive[s] CETs based on aspirational targets on the growth in life expectancy and on the growth in health expenditure”5Vallejo-Torres L Claxton K Edney LC et al.Challenges of calculating cost-effectiveness thresholds.Lancet Glob Health. 2023; 11e1508Google Scholar could be misleading. Our method allows us to quantify how the adoption and coverage of new technologies will influence the rate of increase in life expectancy and health spending, according to their incremental cost-effectiveness ratios. With this information, health systems can estimate their CETs following different approaches, as illustrated in our Article. Second, we do not suggest that the “goal of achieving the historical median evolution is a reasonable target”5Vallejo-Torres L Claxton K Edney LC et al.Challenges of calculating cost-effectiveness thresholds.Lancet Glob Health. 2023; 11e1508Google Scholar for all countries. We provide indicative CETs for 174 countries based on this assumption, but alternative approaches are illustrated in the Article by which countries can estimate their CET, acknowledging that this goal might not be considered reasonable in many circumstances. Third, we disagree with the appreciation that the estimation of CETs using our method “implies the assumption that observed changes in life expectancy are due solely to changes in health expenditure”.5Vallejo-Torres L Claxton K Edney LC et al.Challenges of calculating cost-effectiveness thresholds.Lancet Glob Health. 2023; 11e1508Google Scholar Our method allows the estimation of CETs according to the desired direction of the vector of influence of the new technologies on life expectancy and health expenditure, but it does not require the assumption that any change in life expectancy is due solely to changes in expenditures. We also appreciate Paternina-Caicedo and colleagues’ positive comments about our study. We would like to clarify that under steady-state conditions, health expenditures per capita are equivalent to the total health-care cost of the cohort divided by the total life-years. We did not estimate different CETs for different conditions as this could be considered by decision-making modifiers, and taking development costs into account to define CETs would not be correct. The comment that not all new interventions will have the same incremental cost-effectiveness ratio is correct, but this does not necessarily imply that the CET of novel interventions will be underestimated. Bear in mind that our Article also proposes an alternative method when assuming increases in health spending is not correct (original appendix p 8). Our method does not assume an equal distribution of health services, although we agree that changes in the distribution could affect the CETs by modifying the efficiency of the health system. Nor do we believe that there are elements to affirm that these CETs are the lower limits of the true CETs for every country. We appreciate the chance to discuss and clarify all these concepts. In our study, we present a novel method to estimate CETs that can be complementary to the empirically derived estimates of the health opportunity costs, which also face limitations and require resources and data not available in most countries. Estimating health opportunity costs and establishing CETs are inherently complex tasks that involve simplifying real-world complexities. Striking a balance between methodological rigour and practicality is crucial when communicating and applying CET findings to support health system decision making. The development of alternative approaches could be an important contribution when there is still much uncertainty about the meaning, potential uses, and estimation of CETs; although there is agreement in the findings of all the estimation approaches in that the opportunity cost for most countries is less than the commonly discussed level of one times gross domestic product per capita. We declare no competing interests. Determining the efficiency path to universal health coverage: cost-effectiveness thresholds for 174 countries based on growth in life expectancy and health expendituresThis approach, based on widely available data, can provide a useful reference for countries using economic evaluations to inform resource-allocation decisions and can enrich international efforts to estimate cost-effectiveness thresholds. Our results show lower thresholds than those currently in use in many countries. Full-Text PDF Open AccessChallenges of calculating cost-effectiveness thresholdsHealth systems around the globe use cost-effectiveness analysis to support health funding decisions. Cost-effectiveness analysis compares benefits associated with new technologies with benefits necessarily forsaken when resources are displaced to pay for the new technologies. Systems aiming to improve the health of their populations but facing a budget constraint should use cost-effectiveness thresholds (CETs) that reflect the health opportunity costs of funding decisions.1 Full-Text PDF Open AccessChallenges of calculating cost-effectiveness thresholdsThe Article by Andres Pichon-Riviere and colleagues1 is a welcome methodological addition to the field of health economics. The assumptions of the equations to derive the cost-effectiveness thresholds (CETs) reported in the research help gain insight into the macroeconomic structure of health-care expenditures in each country, reducing the methodological uncertainty of cost-effectiveness evaluations worldwide. This analysis follows a similar path used in previous research,2 in which health expenditures are used as a macroeconomic proxy of the costs of interventions in each jurisdiction. Full-Text PDF Open Access